Growth Machine Gone Global

For decades, those involved in Chicago community organizing have toiled against what has been coined the Growth Machine; a coalescence of interests around promoting the “development” of the loop and downtown. Generations of organizers have advanced an alternative agenda of development for Chicago, a neighborhood based agenda that emphasized using city resources to target development where most Chicagoans live and work, instead of as a tool to entice investment downtown. Such a position was championed in the 1980’s by the insurgent Chicago Mayor, Harold Washington, who managed to outmaneuver the Democratic Party machinery to win the election for mayor in 1983. His administration sought to balance the resources between downtown and the neighborhoods. He allowed downtown to continue its growth while also being proactive about fleeing industrial jobs and passed a bond issue through city council for much needed improvements across all wards, not just the politically connected. Sadly however, Harold Washington’s neighborhood vision was cut short due to a fatal heart attack after his re-election in 1987, but his legacy of an openly progressive challenge was a milestone for the politics of Chicago development.

Fast forward to 2008 where the media limelight has shifted to a new debate between Neoliberalism and its “Anti-globalization” critics. Chicago radicals now are more familiar with authors like Naomi Klein, Arundhati Roy or Noam Chomsky who emphasize the national and international consequences of free-trade than hometown legends like Saul Alinksy or a Lu Palmer speaking about neighborhood neglect. Despite heroic attempts to the contrary, this past decade has seen a divide emerge between Chicago’s organizing community over emphasizing a neighborhood agenda or a more encompassing, yet less articulated, criticism of Neoliberalism. What is emerging however is a synthesis acknowledging that the Neoliberal agenda is not only practiced, but is being authored right here in Chicago and not by a Clinton or a Bush but by our own Mayor Daley.

Neoliberalism in urban American contexts like Chicago has meant a shift of political priorities away from maximizing social welfare and towards maximizing a city’s attractiveness to certain kinds of investment. This new political framework of Chicago has also had a profound impact on urban political economy. Possibly the most relevant implementation of the Neoliberal program in Chicago has been the development strategy designed to support the “postindustrial” financial, real estate, tourist and business service sectors of the economy. Neoliberal ideology holds a transition into a purely service and knowledge based economy as inevitable and that policy makers must accommodate. This inevitable free fall of manufacturing is blamed on the social safety net policies in the developed world that have put our cities at a permanent competitive disadvantage. America’s much ballyhooed transition to the “knowledge economy” is premised on the advantages held in terms of human capital and expertise by the developing world in postindustrial service sectors of the economy. [1] Many neoliberal commentators ranging from John Naisbitt to Michael Rotschild to Thomas Friedman have emphasized policies that pursue growth in the financial and business service sector over manufacturing on the premise of exploiting a national competitive advantage in those service sectors of the economy.

Within the ideological framework of Neoliberalism “individuals” are solely concerned with material welfare, “happiness” is only measured in dollars earned and spent. Immaterial benefits that accrue over the long term to individuals such as the quality of life in a community are not calculated into decision making. Such a systemic bias has influenced policy makers and corporate leadership alike towards promoting short term gain and promoting postindustrial services where gains could be realized much faster such as in financial speculation as opposed to manufacturing industries which require larger physical investments and often realize growth for a community of stakeholders over the long term through the larger average employment per firm, higher average wages, longer term employment and positive spillover effects onto the local economy.

Origins of Chicago Neoliberalism

Chicago’s shift towards a Neoliberal development agenda began in the 1950’s under the first Daley regime. Metropolitan planning under the Daley Sr. administration already acknowledged and supported a shift towards a postindustrial service economy beginning with his election as mayor in 1955. Ambitious plans to reinvigorate the downtown loop area like the 1958 Development Plan for the Central Area of Chicago called for the exclusive use of urban renewal dollars in the central business district. [2] Downtown business interests represented by the Central Area Committee and the Commercial Club lined up in support of the new development strategy that would focus on raising property values downtown, with laudable editorials from the Chicago Tribune about the transformations to come. Daley’s single minded drive to promote downtown development would lead to the construction of 32 million square feet of office space between 1962 and 1977. [3] Reinforcing the dominant political agenda was the political visibility disparity of the downtown stakeholders within the postindustrial services over the stakeholders in manufacturing. Whereas downtown firms like Lasalle Bank, Marshall Fields and Leo Burnett were concentrated into influential constituencies like the Commercial Club and counted the local media outlets like the Chicago Tribune and the Chicago Sun-Times in their ranks [4] the manufacturing stakeholders included a large number of small firms, dozens of Daley boot licking alderman and a near invisible workforce dispersed in the periphery neighborhoods of the city.

Chicago’s political landscape changed after Daley Sr.’s death in 1976; though the neoliberal agenda was continued by mayors Michael Bilandic and Jane Byrne. Post Daley Sr., the Democratic Party power base had been eroded by federal investigations into patronage, a diluted white ethnic support base and the alienation of Chicago’s Black community from the political machine; all of which meant that elections needed to marshal even more financial resources from downtown donors to compensate for the dearth of political hirings.

Under Daley Sr., Bilandic and Byrne the consequences of the neoliberal agenda were apparent; between 1967 and 1987 Chicago lost 326,000 manufacturing jobs. [5] Industrial suburbs such as Cicero were particularly hard hit; by the 1980’s Cicero lost 50% of its total employment. Neoliberalism’s explanation for deindustrialization blamed manufacturing’s lack of “international competitiveness,” yet many disagreed with the economic fatalism. Economists such as Paul Krugman estimated that foreign competition could only account for a small portion of manufacturing’s decline at 15% or less. Many firms lost during deindustrialization were liquidated due to attrition and could have survived with the help of a less negligent city government. The majority of Chicago manufacturing firms are small privately held companies; some liquidated their assets because of the lack of a succession plan between generations. Numerous progeny of (white)manufacturing entrepreneurs no longer wanted to be tied to physical assets in deteriorating and often racially changing neighborhoods. In a study conducted by the Chicago based Center for Community and Labor Research, fully 40% of Chicago’s manufacturing firms were at risk of attrition due to the lack of a succession strategy. [6]

Firms even left comfortable profit margins in Chicago to follow the neoliberal maxim to pursue the higher short term gains. Insidiously, another practice which became commonplace during the rapid deindustrialization of Chicago was known as “milking the cash cow.” One notorious corporate sponsor of this strategy was the Gulf and Western, a company that was financed from Chase Manhattan Bank to begin acquiring profitable manufacturing firms. The “strategy” literally meant driving the companies it purchased into the ground, neglecting necessary improvements and repairs and strong arming workers for concessions with the threat of plant closure. Only a few years after the acquisitions of the companies the end result was the formerly profitable companies’ liquidation and the reinvestment of the massive profits back into industries with higher profit margins; in Gulf and Western’s case the profits from plant closures in the Chicago area were reinvested in Paramount Pictures. [7]

The west side neighborhood of North Lawndale had been especially devastated by Neoliberal deindustrialization. Once a center of industry and home to the world headquarters of Sears and Roebuck, North Lawndale’s economy collapsed after a number of relocations and plant closings. The International Harvester plant closing in the late 1960’s led to 14,000 lay offs, in 1973 Sears relocated its headquarters downtown and in 1987 relocated its magazine distribution leaving thousands jobless, and the slow decline leading to an eventual shut down in 1984 of the Hawthorne plant of Western Electric left 43,000 jobless. By 1986 the economic devastation was near complete; hundreds of service and retail jobs had also evaporated with the manufacturing jobs. By the close of the 21st century North Lawndale with a population of 66,000 had only one bank and one supermarket. [10] The economic alternative provided by the Neoliberal postindustrialists was the prospect of a becoming home to Chicago’s first Wal-mart to generate employment in the area, unfortunately for North Lawndale however, the neighboring community of Austin was instead selected as the location for the Wal-mart.

“Growth” Goes Global: Chicago in the 21st Century

“The city is changing, you’re not going to see the factories back… I think you’re going to have to look at the financial markets—banking, service industry, the development of O’Hare Field, tourism, trade. This is going to be an international city.” —Mayor Richard M. Daley

Chicago’s contemporary Neoliberal coalition coalesced around the 1989 primary campaign of Richard M. Daley in the aftermath of the old-school machine of Daley Sr. and Harold Washington’s progressive neighborhood focused alternative to economic development. The incumbent mayor after Harold Washington’s death, Eugene Sawyer, was overwhelmed by Daley’s election campaign and not only found himself isolated without a city-wide base to draw from, but also was saddled with a lackluster enthusiasm from his black base. Daley Jr. also had the advantage of being the only credible white candidate put forward by the Democratic regulars and could count on the united support of the northwest and southwest ethnic enclaves which viscerally opposed the Washington campaign and Washington’s subsequent administrations. Since Richard M. Daley could not exploit a Democratic Party machine for his election campaign, he instead relied on the electoral war chest provided to him by his corporate backers. In the primary alone he amassed over four million dollars and was able to own a virtual monopoly on radio, television and print media advertising. [11]

Shortly after his election as Mayor, Richard M. Daley began lobbying for state funds to further develop the central business district, advancing bold plans to revitalize Navy Pier as a major tourist destination and downtown highlight. Mayor Daley’s investment in a new United Center that would serve as home to the Chicago Bulls would become emblematic of Chicago’s emergence as a “Global City.” The other major public investment that helped secure Chicago’s place as a “Global City” and a leading center of postindustrial services would be the renovation of the McCormick Place, an anchor for many of the important postindustrial services in Chicago. Other downtown beautification projects such as Millennium Park and the Soldier Field and Comiskey Park renovation were also spear headed by Mayor Daley and the neoliberal coalition. Even though Daley Jr. masterfully shifted some of the financial burdens from such extravagant developments to other parties, the city still bore much of the costs of the Neoliberal downtown development scheme. Instead of funding desperately needed capital improvements in black neighborhoods, or funding industrial retention programs, the coalition’s strategy maintained an exclusive focus on downtown. Constructing the entertainment complex at Navy Pier totaled out at $250 million dollars, [12] the McCormick Place expansion totaled $987 million dollars, the United Center at $150 million dollars, the new US Cellular Field at $200 million, Millennium Park after being over budget and behind schedule totaled over $500 million, the Lakeshore Drive and Museum campus project totaled at $110 million and Soldier Field’s expansion totaled $680 million . [13]

For such a massive public investment, the tourism industry is only responsible for generating an estimated 128,000 jobs [14], barely even keeping pace with the continued hemorrhage of the manufacturing industry, which between 1985 and 2000 lost another 100,000 jobs. [15] When viewing the jobs created by tourism as replacing those in manufacturing, one should be cognizant of the significant disparity in wages between the new jobs in hospitality vs. the jobs in the manufacturing industry; manufacturing jobs provide three times the weekly take home pay of those in hospitality. There is also a substantial difference in the career path opportunity disparities between the two industries; whereas one is very unlikely to advance through the career ladder at a hotel establishment from an entry level position, one is much more likely to advance in the manufacturing industry because the additional skill sets and expertise that accumulate over time are the essentials to promotion with less emphasis on formal education.

Significant wage disparities exist between manufacturing employment and the employment offered to those without a college degree in the postindustrial economy. As per the 1997 census statistics as calculated by the Chicago based Center for Labor and Community Research, the average annual salary for Cook County manufacturing workers was $40,840 while Cook County service-sector workers averaged $32,251 and with retail workers averaging $17,045. [16] In March 2003 the average weekly take home pay of a manufacturing worker was $610 whereas the weekly take home pay of restaurant worker was $194, the weekly take home pay of a retail worker was $332 and the weekly take home pay of someone in the hospitality industry was $211. [17] Over 70% of manufacturing employers also provided direct healthcare coverage to their employees compared to less than 50% for the rest of the private sector, and 78% provided contributions to retirement accounts. [18]

The spillover effects on the community from manufacturing employment are considerable as well. For every job created in manufacturing, 2.7 jobs are created in the local economy, whereas each job in services only creates .8 jobs on average. The health of the manufacturing sector therefore influences the health of many other sectors of the economy, as each job in manufacturing creates more jobs in other sectors of the economy. High wages and benefits paid to employees help create this multiplier effect as well as a recycling of manufacturing firm purchases back into the local economy through spending on local inputs and services, with nearly 47% of all spending being recycled back into the local economy. [19]

In addition to spending hundreds of millions of dollars in public infrastructure to accommodate certain industries, Daley Jr.’s neoliberal coalition provided other, more direct, incentives for corporations as well. When Boeing announced it was planning on relocating its corporate headquarters from Seattle, Chicago entered a bidding war with Denver to see which city would be willing to make the pot the sweetest for Boeing. The decision was made to relocate to Chicago after a subsidy package worth $64 million had been organized containing various tax incentives, promises of facilities and other expenses incurred by the city and state government, besting Denver’s offer of only $18 million in incentive money. [20] Even though the Boeing relocation was provided around 400 jobs that were mostly executive and administrative, the successful bid by Daley for the relocation was heralded a success for his Neoliberal vision of a cosmopolitan and corporate downtown business district.

Was it Think Locally, or Think Globally? Maybe it was Act Occasionally?

Clearly Mayor Daley and the Commercial Club know what direction they want Chicago to follow. The question is, are we ready to pose a challenge to their agenda that privileges profit over people. We have an opportunity to mount an offensive against the Daley regime’s Neoliberal agenda. What we need is a radical agenda that can unite Chicago’s labor, peoples of color and white liberal constituencies around a new vision of politics. Chicago needs a new and pragmatic social order that can educate our youth, provide decent housing, a green urban landscape, rewarding employment and end the political and police corruption. Hope alone is audacious, but it becomes potent when combined with vision and determination. ♦

1. See Naisbitt, John. Megatrends 2000 : Ten New Directions for the 1990s. New York City: Murrow, 1990.